Iowa authorities seized $167,840 after identity theft case, but had to return it all

On Nov. 16, 2016, Matt Anderson of Des Moines was initially stopped by Ankeny police as a suspect in an identity fraud case. Officers later found a firearm and over $160,000 in his car and arrested him. Charges were later dropped and his money was returned after a year-long courts battle.
Linh Ta / The Register

Dashcam footage of Matthew Anderson in handcuffs in the back of Ankeny police car as officers unlawfully search his car, according to court records.(Photo: Special to the Register)

It started last fall, when a hotel employee allowed a computer to auto-fill information about a new guest.

The next morning, Polk County dispatchers received a call from an Iowa Department of Public Safety agent, saying his credit card had been fraudulently used at a hotel in Ankeny.

What followed was what was ultimately determined to be an unlawful search and the civil seizure of $167,840 — money that had to be returned with interest because of slip-ups by authorities.

The case played out amid the long-standing questions from civil rights advocates and others about the propriety of asset seizures in cases in Iowa and nationwide in which no one is ever charged with a crime. A defense lawyer and a civil rights advocate say the seizure and its reversal demonstrate the need for more stringent laws and how existing law can drag people who aren't culpable for crimes through costly legal proceedings to protect against abuses.

On Nov. 16, 2016, Matthew Roger Anderson, a special agent from the Iowa Department of Public Safety, noticed a confirmation email from the AmericInn at 1610 Southeast Oralabor Road in Ankeny saying he was a registered guest. But he hadn't stayed at the hotel the previous evening.

He called dispatchers and said he believed he had been the victim of identity theft. Anderson had already been a victim of identity fraud in Colorado, two months earlier, he said in a deposition.

Ankeny police detectives Michael Williams and Betsy Anderson went to the hotel and, based on a physical description, confronted a man and woman as they headed toward vehicles. They stopped Matthew Leroy Anderson, 29, of Des Moines and his girlfriend, Lindsey Utter, 30, of Des Moines.

When asked for identification, Anderson gave Williams a non-photo Iowa Department of Transportation license, which was issued after he appealed the suspension of his driver's license for repeated violations.

The detective couldn't confirm Anderson's identity because he was using an undercover car and didn't have access to a computer that could access criminal files, according to court documents. Williams asked if he could search Anderson's wallet for other identification, and Anderson didn't give his consent.

"I'm not going to explain it all right now, but I'm asking for your wallet," Williams says in a dashboard camera recording of the encounter. "I'm not looking for dope or anything like that."

Matthew Anderson was arrested in Nov. 2016 and charged with possession of a firearm by a felon and fourth-degree theft. However, charges were dropped after a judge ruled the search of Anderson's vehicle was unlawful.(Photo: Special to the Register)

"I don't know if I should be asking for a lawyer right now," Anderson can be heard saying.

While searching Anderson's Ford Explorer, Williams found a loaded magazine and asked him about it, according to court records. Anderson told the detective that he was on parole. The police handcuffed him.

Williams kept searching the SUV for a gun to go with the magazine. In the back seat, he found a backpack with an E-cigarette that smelled of marijuana. In the front passenger seat, he found another backpack with $167,840, according to court records.

While Anderson sat in the back of an Ankeny police squad car, Williams went inside the AmericInn and confirmed that Matthew Leroy Anderson had registered at the hotel under his name and stayed there the night before. Interviews and surveillance video recordings indicated that Anderson paid in cash and was not asked to show his ID, according to court records.

An employee explained that the other Matthew Anderson, the Iowa Department of Public Safety special agent, had stayed in that AmericInn previously for work. When the Nov. 15 booking for Matthew Leroy Anderson was being entered into a computer, information for the special agent automatically filled fields, leading to the booking receipt being sent to him, an employee told Williams. The mix-up was the result of a coincidence.

But by this point, Anderson was in custody, and an Ankeny K9 had found methamphetamine on Utter's person, according to court records.

Anderson was charged that afternoon with being a felon in possession of a firearm and fourth-degree theft — the gun was listed as stolen by Des Moines police. The money was seized on the basis that it may have been involved in drug trafficking, according to court records. Utter was charged with possession of methamphetamine, according to court records.

The DPS agent Anderson, after calling dispatchers, had started driving to Ankeny from Clear Lake, about 90 minutes away. He showed up at the hotel and spoke with Anderson while he was in custody, according to a deposition.

“Do you know why you are here or how you ended up here?” the special agent asked.

"No," Anderson replied.

“Well, I don’t think you’re going to believe this either,” the special agent said.

When asked about the incident in a deposition, the agent said, "It was probably the strangest set of circumstances I’ve witnessed in 23 years," he said. “It’s a pretty large coincidence.”

The Mid-Iowa Narcotics Task Force deposited the money into a state bank account.

This more than four-hours-long stop led to a nearly year-long legal battle that concluded with all criminal charges being dropped and the cash seizure overturned.

Charges were dropped against Utter and Anderson after a judge ruled that the Ankeny Police Department's search violated their Fourth Amendment rights.

While 2.7 grams of methamphetamine was found in Utter's purse, Associate District Judge Odell McGhee determined that the four hours it took to stop her was unreasonable, particularly because she wasn't being questioned for the identity case in the first place. The drug charge was dropped.

"The underlying stop for fraudulent credit card use has no relation to the subsequent drug investigation and was impermissibly prolonged by law enforcement," McGhee wrote in an April ruling.

As for Anderson, the stop was lawful when officers were trying to determine whether he was involved in identity fraud, another judge wrote. However, the subsequent search through the vehicle for a gun was unlawful because it wasn't related to the initial stop, District Judge David Porter ruled. The charges against Anderson were dropped in September.

Ankeny police chief Gary Mikulec said "search and seizure laws are extremely complex" and can boil down to minutiae.

"This case, and many other criminal cases routinely investigated by police officers, calls into consideration complex laws," Mikulec said. "Search and seizure laws are extremely complex and subsequent legal arguments can boil these issues down to minutiae. Attorneys routinely debate the language of law, as was done in this case."

Mikulec said the rulings can also be attributed to a recent court decision that doesn't allow law enforcement to delay a traffic stop in order to obtain additional evidence.

"This is why one law can be debated by attorneys, and courts are split on the decision," Mikulec said. "These types of events raise very narrow standards related to search and seizure. Our agency is satisfied with the court ruling in this matter."

Mikulec said officers were trying to unravel what was going on and that it would take more investigation than a traffic stop.

"The confusion during the traffic stop was that the driver's name was Matthew Anderson as was the complainant, " Mikulec said. "This was going to require additional investigative work beyond a roadside traffic stop. All evidence and information was provided to M.I.N.E. at that point to investigate due to the potential drug nexus."

When it came to the money, the state failed to file a notice of pending forfeiture, as required under Iowa law in seizure cases. On May 9, a judge granted Anderson's motion to dismiss the forfeiture, according to court documents.

The state briefly appealed the ruling but in October returned to Anderson all of the money, with interest, according to court documents.

"We’re seeing a lot of cases where the search — particularly vehicle searches — are done unlawfully," said Dean Stowers, attorney for Anderson's civil forfeiture case. "They then result in the forfeiture cases not being sustainable."

In dashboard camera footage, Anderson claims he was working home remodeling in West Des Moines. Court documents show that with the loss of the money, he lost the ability to invest it.

"Lawyers don’t work for free," Stowers said. "That’s a burden on anybody. And it’s not right, really, that somebody should wind up in that position, but there’s procedures in the law and legal actions that could be brought for violation of civil rights in these kinds of situations, based on the illegal search and seizure."

Joseph Bertogli, lead defense attorney for the criminal cases, said that unlawful searches and seizures are not uncommon with law enforcement in Iowa. But this case stood out because of how it started, he said.

"It was unique in that it started with a DNE agent who believed he was the victim of identity fraud," Bertogli said.

Civil forfeiture in Iowa is an ongoing concern, said Mark Stringer, executive director of American Civil Liberties Union. He said the Iowa Legislature took a step in the right direction last session to address it, he said, citing as an example a provision that now requires a criminal conviction before law enforcement can seize $5,000 or less. "However, we’d like to see that taken a step further so that a conviction is required when seizing any amount," Stringer said.

He also said he'd like to see legislation that changes the law so "the profit incentive" for law enforcement is removed, he said.

Iowa law enforcement agencies have seized more than $55 million in cash from more than 19,000 people since 1985 using state law, a Des Moines Register investigation published in October 2016 showed.

State agencies additionally seized more than 4,200 vehicles and dozens of real estate properties.

Those totals do not include profits from using the federal forfeiture law, which has added at least another $24.2 million to Iowa law enforcement budgets since 2009.

The full extent of proceeds that Iowa has gained from forfeiture — money that is primarily funneled back to the same agencies seizing the property — isn't known, since state data doesn’t track most seized valuables, such as guns, jewelry, furniture and artwork, the investigation showed.

A call to DPS agent Anderson's household was not returned. A request for an interview with Assistant Polk County Attorney Nan Horvat was not returned.